Monday, May 7, 2012

Business to Geithner: more pressure on India

Tax Analysts recently published a letter from the USCIB [gated] and other business groups to Tim Geithner, urging him to step up the pressure on India because apparently their message isn't getting through so far:

We write to thank you for raising concerns in your recent meeting with Finance Minister Mukherjee regarding the proposed Indian tax legislation and to request further engagement in this matter. Unfortunately, pronouncements by Indian officials since that meeting have not allayed the concerns of U.S. and other foreign investors. To effectively address these issues, the proposed legislation needs to be amended.

The letter lists three changes the business community wants India to make:

The proposed legislation will not be applied with retroactive effect, even for the suggested 6-year period.

The proposed legislation will not be applied to reverse favorable results already obtained by a taxpayer in a final decision of any Indian court, or in any case assessed and finalized prior to April 1, 2012.

The proposed legislation will not be applied in a manner inconsistent with India's obligations under its tax treaties.

(2) is obviously aimed at protecting Vodafone specifically. It then follows with this:

...If the Indian Government is not prepared to offer legislative amendments providing assurances on these three points at this time, then it should be urged, at a minimum, to adopt a deliberative review and consultation process with all stakeholders prior to enactment...

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